High inflation and rupee devaluation weighing on CSE investors

By Hiran H.Senewiratne

The CSE began yesterday on a positive note amid moderate activity. But investors were worried that macro- economic issues, such as the energy crisis, high inflation and the rupee devaluation, were likely to affect market activities, stock analysts said.

The Department of Census and Statistics said that the month of February reported the highest inflation and investors anticipate that this month inflation would be higher than in February, which was 17.5 per cent, stock analysts added.

Amid those developments both indices indicated mixed reactions. The All -Share Price Index went up by 16.82 points and S and P SL20 declined by 6.3 points. Turnover stood at Rs 1.3 billion without a single crossing. In the retail market, top seven companies that mainly contributed to the turnover were, Royal Ceramic Rs 145 million (2.8 million shares traded), Expolanka Rs 144 million (555,000 shares traded), Commercial Leasing and Finance Rs 95.3 million (3.1 million shares traded), Browns Investments Rs 92.7 million (8.4 million shares traded), Hayleys Rs 91.6 million (913,000 shares traded), Lanka IOC Rs 55.1 million (1.2 million shares traded) and LOLC Finance Rs 53.5 million (3.1,million shares traded). During the day 65 million shares changed hands in 18000 transactions.

However, retail activity remained at moderate levels as investors continued on the sidelines assessing the prevailing economic conditions and trading momentum in the market.

Foreigners ended on the buying side with a net inflow of Rs. 41mn led by JKH (Rs. 25 million) and Vallible One (Rs. 8.3 million). The ASPI commenced the session with a gap of 69 points and traded upwards until the mid-afternoon session, supported by price gains in selected heavyweight counters across sectors.

The bourse continued to pursue positive momentum for the second day as the announcement of consideration of financial assistance by China to Sri Lanka resulted in investors brimming with hopes, stock market analysts said.

In the money market, the Central Bank was quoting an indicative spot rate of Rs 280.00 per dollar, up from Rs 275.00 per dollar, a day earlier. Market participants said the rupee is quoted around 285 in bids with no firm offers. Commercial banks were offering to sell dollars at Rs 274.99 for telegraphic transfer and buy at Rs. 264.66 on the previous day.